- HEADLINES: Wheat falls on massive fund selling ahead of report; Corn/soybeans stabilise on 3 Gulf elevators seeing power; USDA report tomorrow.
- Chicago values opened under pressure and rebounded into the mid-morning as news surfaced of several Gulf exporters coming back on line as power is restored to 2-3 key facilities. Once the lights turn on, it will take facility managers a day or two to make sure that machinery is functionally normal. However, hope continues to build of CIF/FOB trade starting to return with more vigour with employees to be called back to work in each facility next week.
- Zennoh, Bunge and ADM Destrehan either have power or are expected to have the lights on by later today. The roof in the ADM facility was torn off by Ida and it will take longer to assess damage. However, barge and ClF trade is returning with CIF soybean values up $0.05/bu this morning, a positive sign. It is hoped that other facilities will be operational next week, but Cargill Reserve will be down for months for structural repair.
- Pent up Gulf export demand could surface Friday or by early next week. China has been securing soybeans off the PNW, but they would rather book the cheaper Gulf premium. Also, there is talk that China may have interest in US corn from March forward, though confirmation of any sale is lacking.
- It is supportive news that Gulf grain trade is restarting, but there are another 8 Gulf facilities that must come back online to be back at capacity. That will take more time with Cargill Reserve needing months to rebuild damaged legs. But having 4 facilities restart is a step forward and relief to the marketplace.
- Chicago brokers estimate that funds have sold 2,500 contracts of corn, 4,100 contracts of soybeans, and 7,900 contracts of wheat. In soy products, funds have sold 4,600 contracts of soyoil and 1,600 contracts of soymeal.
- FAS/USDA announced the sale of 132,000 mt of US soybeans to China.
- Corn cutting is beginning across portions of the Midwest and Plains with highly varied yields reported. The varied yield story is one that traders will have to struggle through in 2021 due to the big disparity in rainfall from the E and C Midwest to the W Midwest and the N Plains. To date, the yields in IN/IL/OH have been slightly less than expected, but it is too early to determine a trend. That trend determination will occur in a few weeks heading the important NASS Small Grains Report and the September Stocks in all Position Report. The recent heat/fast dry down of the crop is tugging E Midwest corn yields slightly lower.
- The early release of the September FSA data has caused a bigger divergence in 2021 US acreage expectations than existed beforehand. Research sees the FSA data as being substantially complete which helps to confirm the NASS June Seeding estimate. Other analysts are utilising month-to-month 5-year changes in adding 1 million acres to US corn and 1.5 million acres to sorghum, and 200-400,000 acres to soybeans. We do not believe that using the 5-year average gain from September to October is worthwhile in 2021 on record enrolment. We argue that NASS (June Report) has it close to right.
- CONAB dropped their 2021 estimate of total corn to 85.7 million mt and wheat to 8.1 million mt which is down 1.0 million, and nearly 500,000 mt, respectively.
- The midday GFS weather forecast is like the overnight run with dry/warm temperatures into next Wednesday with showers then falling across the Lake States. The E Midwest holds in a drier flow with seasonal 70′s/80′s.
- The trade leans bearish for the September USDA crop report based on the prior Pro Farmer Crop Tour results and expectation that the East will make up for the losses in the West. Yet, NOAA just released that the summer of 2021 was the warmest on record across the US. Heat is that one yield thief that is often missed. Our bet is for a smaller crop that will shrink further into January.